Kossoff’s bankruptcy trustee warns of upcoming contentious case

Signage is seen in the United States Bankruptcy Court for the Southern District of New York in Manhattan, New York, United States, August 24, 2020. REUTERS / Andrew Kelly

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(Reuters) – The trustee overseeing the bankruptcy of New York real estate law firm Kossoff PLLC said on Thursday there was a bumpy road ahead as he worked to sort out the firm’s affairs, which recently have is the subject of criminal investigations.

Togut Segal & Segal’s Al Togut, who is the company’s Chapter 7 administrator, made his statements in a virtual hearing in which U.S. Bankruptcy Judge David Jones in Manhattan extended an order prohibiting all alteration or destruction of the company’s books and records. Togut has asked for the extension to help him in his efforts to assess the company’s financial position following a series of lawsuits by creditors who say they owe millions of dollars.

In April, some of these creditors filed involuntary bankruptcy proceedings against the company. They say the company founder, Mitchell Kossoff, has disappeared after being sued by several clients who accused him of embezzling their funds. Several lawyers have resigned from the firm in recent months.

Togut attorney Neil Berger said at the hearing that Kossoff allegedly “ran away” or failed to account for $ 17 million in client funds that should have been sequestered.

Walter Mack of Doar Rieck Kaley & Mack, who represent Kossoff, said during Thursday’s hearing that his client did not intend to destroy any of the documents. However, he reiterated statements he made in court records this week that the documents are in the hands of state and federal prosecutors who have launched a criminal investigation into Kossoff. Mack also indicated that some of the documents may be protected.

Kossoff’s whereabouts were not discussed during the hearing, although it appears he was listening to the proceedings as the name “Mr. Kossoff” was on a list of attendees on the website that hosted the virtual audience.

After Jones approved the extension of the records retention order, Togut, who was previously senior counsel for global law firm Dewey & LeBeouf during its historic bankruptcy in 2012, warned that the firm’s case would be probably difficult at first.

“It’s the easiest audience you’ll have in this case,” Togut said. “We are faced with many disputes. There are difficult issues that we have to face.

The trustee accused Kossoff of refusing to cooperate with his requests for the company’s financial records. Mack, however, said Togut knew the documents were taken away by prosecutors. He also said Kossoff and the company would invoke their Fifth Amendment rights not to incriminate themselves.

“Mr. Kossoff has constitutional rights which deserve to be protected,” he said.

Mack also noted that he is not a bankruptcy attorney – he is Kossoff’s criminal defense attorney – and only represents his client in Chapter 7 proceedings because Kossoff does not have the funds available. to hire a bankruptcy lawyer.

Jones said in making his decision on the retention of the documents that he did not view the allegations against Kossoff as established behavior.

“I must clarify that I am not drawing any definitive conclusions about Mr. Kossoff,” the judge said.

Berger said the trustee’s team had been in contact with the Manhattan district attorney and the U.S. prosecutor in Brooklyn, who Mack said recovered documents from the firm’s office as part of their investigation.

The case is in Kossoff PLLC, US Bankruptcy Court for the Southern District of New York, 21-10699.

For Togut: Neil Berger, Brian Shaughnessy and Minta Nester of Togut Segal & Segal

For Kossoff: Walter Mack de Doar Rieck Kaley & Mack

Read more:

Manhattan real estate attorney Mitchell Kossoff faces criminal investigations in New York and the United States

Dewey & LeBoeuf bankruptcy veterinarian solicited for Kossoff case

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